I don’t know anyone who enjoys writing a budget for themselves, but doing so can bring financial confidence and have long-lasting positive impact. I know that when I start talking about personal finances to most people they either switch off, change the subject or walk away! But, even if this is you, don’t click away, give it a go, you may not be asleep by the end of it!
Tip 1: Tell the truth by knowing the truth
There is no use wriggling when in sinking sand, you only sink faster!!
“I believe that it is better to tell the truth than a lie. I believe it is better to be free than to be a slave. And I believe it is better to know than to be ignorant.”
H. L. Mencken
Once you know where you are starting from, it is easier to know where you are going. If you earn $50,000 a year, don’t write in your budget that you earn $100,000 a year, even if that is your goal. If you spend $400 per week on groceries, don’t put in your budget that you spend $250 per week, even if that is what you would “like” to spend, it is not the truth.
Once you have the actual truth in front of you, including all your extras, you can make real choices about real situations. Doing this is not only freeing, it is also helpful when out shopping to not buy items that you don’t need, or book trips you can’t afford. See it as an opportunity to get creative, figure out a new income stream, economise on boring spending such as power and other utilities, make sure you have the best deal from your bank (yes you can and should negotiate with them).
Tip 2: Use 3 months’ of Actuals (i.e. direct from your bank statement)
Bank statements are now able to be downloaded easily enough and the information can be sorted in different ways to suit what you are trying to find out.
You can also use a budgeting website such as www.financial.me to organise your income and spending.
Starting from your actual spending will help you identify what is going right, as well as what is going wrong, and more importantly give you an opportunity to change what is necessary to move in the right direction.
This whole process is about improvement and creating opportunity for success, so if you are not feeling this way by now, then the next tip is for you.
Tip 3: Don’t beat yourself up, practice makes perfect, or close enough
We all make mistakes, we are human, it happens.
We can also be caught out by circumstances beyond our control. If this is you, do not fret, the best path to making it back to your goals is to readdress the actuals, adjust for the interruption and figure out a way forward. If you are having trouble with this, at least you will know your actual situation when seeking help, which will save you lots of money if you are paying by the hour to sort it out.
Don’t look at unexpected detours as failures, just think of them as opportunities to practice finding your way back to the road you want to be on.
As financial advisers we are here to help, we are interested in YOUR success, because it becomes our success. If you need help, please ask, if we can’t help you we will try and find you someone who can.
It is your money, in your hands, whether or not it is sorted, is up to you.